Coronavirus impacts exports
Over the last week we have seen fast changing impacts on our supply chain, as China attempts to halt the spread of the coronavirus.
Across much of China the Lunar New Year holiday period has been extended. Bloomberg reports that 14 provinces and cities across the country have said that businesses need not start operations until at least the second week of February. Combined, they account for 69 percent of China’s GDP. This extension comes on top of other measures, including quarantining whole cities, that are set to disrupt supply chains and logistics.
China currently takes a quarter of New Zealand’s exports, compared with about five percent in 2003. It is our second biggest tourism market, accounts for over half of our log export market by value and is a key market for our largest export industries of dairy and meat.
From a global context, any slowdown in China will impact our other trading partners. In 2003, Australian exports to China were AUD$11 billion or seven percent of their total, but they are now $152 billion, 32 percent of total Australian exports.
In total, China’s economic output has grown from USD$1.7 trillion at the time of the 2003 SARS virus to $14 trillion. The New York Times comments on wider threats to the global economy in this article: https://www.nytimes.com/2020/02/03/business/economy/SARS-coronavirus-economic-impact-china.html?smid=nytcore-ios-share
In the first week of February, we saw major impacts in the logging, tourism, fisheries and agriculture industries, where the ability to supply products into the Chinese market has come to an abrupt stop. Anecdotally, we are hearing of impacts in meat and dairy too.
We hope this situation will quickly correct itself once the Lunar New Year holiday period ends. However, should this continue longer, it may have larger implications for both our economy and others.